frozen_out
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Posts posted by frozen_out
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The right move index never goes down. Ever. It's a complete waste of time mulling over it. Move on, there's nothing to see here.
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Seedy? This describes pretty much every marriage I know!
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1 hour ago, regprentice said:
I think the 'premium' brands manage to paint running and servicing costs as part of the mystique of keeping a premium machine running optimally. As if they are so special that without the constant and gentle fondling of a 150 quid an hour mechanic the car would simply wither away and die.
Japanese cars are different but i saw the same mentailty in a company director who had bought a impreza wrx sti. Told everyone how special the car was that it needed 3 services by 10k miles, including being taken back at 1k to check it was 'settling in properly'.
Subsequent owners buy the cachet but may not feel the same about servicing costs etc. My sister in law has this problem...shes just remortgaged as her 12 yo 3 series threw a £3k Garage bill. No idea whether shes repairing the old one (a poverty 320d) or buying another.
Im a big fan of the smoker barges 1-5k thread on pistonheads. Loads of great 30-100k cars being discussed that can mow be had for 'pennies'. But. Some of the ownership/cost experiences shared on the forum are eye watering!
On the smoker barges point - I was really tempted to buy a Phaeton, until I found out that lightbulbs are main dealer job. Mate of mine bought a second hand Aston Martin, cost him a 5 figure sum in the first year.
If you can't afford to buy it first hand, you can't afford to run it second hand.
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3 hours ago, dances with sheeple said:
Would you have believed that all the interventions to prevent that correction would have brought us to Trump/Brexit and maybe EZ collapse? The resulting bust will be much bigger for all the meddling IMO.
No, that's entirely my point!
The resulting bust will be much bigger - to the point where if/when it happens owning a house will be the least of your/our worries.
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I've been thinking more about this, and it's not so straight forward as the cost of buying vs renting starting from *now*. There's an alternative, more relevant question which is 'will it cost less to buy now or buy at some point in the future?'
This makes the assumption that some people are speculating, implicitly, if not explicitly on the cost of renting now+buying in the future being lower than buying now.
In order for buying to be cheaper you pretty much have to discount the cost of maintenance (or at least the cost of upgrading) to zero, mainly because from an accounting perspective it's not really legitimate to discount outgoings with respect to time (although there are circumstances where you could). Personally I spend significant (to me at least) amounts of money on decorating etc. which is pretty much ongoing. That means for me at least, buying will always be more expensive than renting. However, if the question is 'will it cost less overall to buy in the future' then these costs pretty much net out to zero in the consideration and you get a 'fairer' comparison.
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1 minute ago, Bland Unsight said:
Can you provide us with an example of one of these people, or are you just taking it for granted that they exist?
QuoteIt only takes a 10% fall in prices over 5 years for renting to be COST NEUTRAL to buying. I can see that happening in Prime London (Zone 1) where I live.
If someone had told me in 2008 that London prices wouldn't fall by 10% in 5 years, but would actually increase I'd have thought them a clown. We live and learn.
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2 minutes ago, Bland Unsight said:
I accept that people dip into threads, and I also accept that you may not share my interpretation . Here's what the OP posted - and it explicitly addresses his intention in starting the thread (emphasis added)
I understand where you're coming from. I guess my intent is different again, the renter's reasoning isn't of a great deal of interest to me (or I could start whining on about security of tenure etc., which is a valuable intangible in the current climate). My intent is to highlight what I consider to be an almost unconsidered risk of those intentionally sitting out the market with the intention of minimising medium-long term housing costs (of which there are many) - namely that the market might not fall as far or as fast as you either need, or want. And then you're really ******ed, sat on a stack of cash, renting and then still buying in at a higher price than you'd like because you got fed-up. You then have the additional worry of having mistimed the big one.
It's a ******ing minefield - my gripe (I'll admit it's a gripe) is that it's not often that this is expressly discussed on HPC. Having been round the block a few times and been stung myself because I didn't properly consider the sums in this way it's something that:
a) I feel I can talk about comfortably and knowledgeably about
Something I should talk about, if only to give someone the opportunity to consider a slightly different viewpoint. Regardless of whether I'm right or wrong.
That's why I pop up occasionally on these types of threads.
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Just now, Venger said:
I can buy, but I am not going to compromise and buy a really shit expensive house, in a market that until very recently has seen so much BTLer activity.
Also because I refuse to buy in a market which has had so much BTL activity in recent years.
Time over in regional we've seen houses fall to BTLers and returned to rental market. HTB triggered a BTLer double-down, possibly in belief that HTB means Gov stands entirely behind the housing market (all lessons of crunch forgotten that real estate runs on money) and green/greed-lighted them to double-down to feast on the life blood of Generation Rent Forever.
It shouldn't be such a gamble/speculation to buy a house, but it has been because of so many BTLer/HPI speculator tw@ts who made their choices.
S24 offers hope and now we have a multi-unit BTLer people farmer who is whinging about his 'ridiculous' marginal tax rate on some of BTLs (80% he claims, but it's all nonsense to me... it's his debt). A BTLer who believes changes to Wear and Tear unfair (he had assumed £30K billy bonus over the years he planned to hold each unit).
You want guff. You can read it in all the BTLers lashing out, and many of them heading into very different financial circumstances with S24. They're going to be gutted like fish.
So you're going to buy when you buy when you can buy a really great, cheap house? Well done you. Seriously, all the best. I'm sure you've got a price and some metrics that you'll be using to judge your entry point. Best of luck.
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5 minutes ago, Patient London FTB said:
The guy is clearly desperate to kid himself he has some sort of control over where the market is going.
Having wasted half an hour catching up on this trollathon thread, I feel bad for feeding him in the first place.
QuoteTo add to this, we also have falling rents in London. So why would any BTLer buy there now? Even if they wanted to, it's a question of finding a bank that is brave to enough to lend after plugging falling capital values and falling rental values and 145% interest cover into its model. Lenders have got ultra-cheap funding for the time being, so while the music's still playing they're still dancing, but how much longer can it go on?
And therein lies the risk. I think it was Buffet who said that markets can stay irrational for longer than you can stay solvent. Never a truer word spoken.What i will say is that the party seems to be over for know. It's just a question of how far and how fast. Some people just don't see that there is a very real possibility of 'not far enough or fast enough' if your aim is to minimise your long term housing costs.
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14 minutes ago, Bland Unsight said:
Trying my hand at RushRoad's signature equation style, surely Falling rents + Falling prices = BTL mortgage prisoners on the SVR=Forced sales?
Actually Patient, I think we're a bit off-topic here. Apparently this thread isn't anything to do with BTL. It's some kind of risk awareness exercise carried out by a BTL investor for reasons unknown.
I think you're being a touch unfair. I can't claim to know the OP or his intent (which may or may not be as you describe) but assuming that people are aiming to act in their own financial self-interest with respect to buying a house, then the risk of not buying, even at somewhere approaching 'the top' is underappreciated. As is the time value of money.
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1 minute ago, Bland Unsight said:
Sorry, so when I suggest, as I did, that we consider a situation where (emphasis added) "I think prices will rise, but I choose not to buy - even though I can" you see that as speculation?
How are you construing that as speculation?
Like everything else in life, it's all about intent. I'm making the assumption that in the medium-long term people would prefer not to lose money. Or to lose less money. Or spend less. Depending on your POV.
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3 minutes ago, Bland Unsight said:
Interesting - nothing in the OP (quoted first above) or the thread title about that.
I like the way that you're describing the idea of people who don't see value in current prices as "speculatively" choosing not to buy. Hence I am "speculating" if I can find a property that I could buy but I choose not to buy it. I must say that seems to be a rather perverse way to construe speculation.
Let's say I think prices will rise, but I choose not to buy - even though I can. Am I still speculating?
Interesting... do you not see it as speculating on not buying? From memory there are many posters on HPC who claim they *could* buy, but won't. Hence all the guff we get about the opportunity cost on all the savings that people have.
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16 minutes ago, Bland Unsight said:
Perhaps unsurprisingly, there is some data that is relevant here, DCLG Live table 577.
If you rank all the districts in 577 in order of the factor by which house prices increased between 1997 and the 2013 provisional data (when expressed as a multiple of median earnings) then you'll find ordering from lowest to highest Birmingham is about 70th on a list of about 350 districts. For whatever reason, it has escaped the HPI a bit (2.80 in 1997, 4.73 in 2013).
If you sort the table by the 2013 ratio (again low to high) then Birmingham comes out about 40th of the 350 districts. FWIW the mid-point on the list is a house price to median earnings ratio of about 7. Also there are more districts where the ratio is twice the Birmingham ratio than there are districts where it is less.
Picking Birmingham seems a wonderful coincidence, given the point that this supposedly South East based leveraged landlord is setting out to, ahem, 'prove'.
I'd like to see some evidence that people aren't buying because they are worried about falling house prices. I don't stay on top of the survey data so I am happy to be proven wrong and learn something, but my naive expectation would be that younger cohorts aren't buying houses because they can't afford them.
If people aren't buying it's because they can't access the necessary credit (a subtle difference I would argue between that and 'not being able to afford it'). But that's pretty much begging the question. The kicker is the consequences... can the volume hold up well enough for long enough to avoid serious nominal falls?
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5 minutes ago, blackhole said:
Take a SE (not london) based home and that £130k becomes more like £330k for the same equivalent housing. Now, apply 20% drop and your left with £52.8k down (assumed you paid your 20% deposit upfront). For a 2 bed semi. Not everyone can afford to be stuck in a SVR mortgage forever.
On the Birmingham model, it seems like its not possible they'll be possibly left with a £90k 2 bed instead.... nope.... can never happen can it?
Race for equity. That's why to come out ahead the drop has to be short and sharp.
I agree that from this point on i.e. 'the top' all we're debating is the speed of the crash. Doing the same maths from 5 years ago though and the renters have been toasted.
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3 minutes ago, blackhole said:
The issue with your model is simply what happens after the fixed? What happens if you don't want to live in Birmingham, where the capital you'll be left with is a lot more?
At this point its very difficult to say with huge amounts of uncertainty out there. Sure the homeowners have won so far.... but for how long is anyone's guess now.
After the fixed is an easy one to answer... you can basically consider it a race for equity.
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1 minute ago, blackhole said:
The issue with your model is simply what happens after the fixed? What happens if you don't want to live in Birmingham, where the capital you'll be left with is a lot more?
At this point its very difficult to say with huge amounts of uncertainty out there. Sure the homeowners have won so far.... but for how long is anyone's guess now.
OK, RushRoad has jumped through some hoops and posted a fully worked example. It seems a little uneven to let you off the hook with mere speculation and 'anyone's guess guv innit?'
So your numbers are what exactly...
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2 minutes ago, RushRoad said:
I am going to try this again with more detail and showing each step. Firstly lets not look at the whole of the UK as each region is different so lets pick a specific region or city. I am going to use Birmingham but we can do somehting similar for a few other areas too
Looking on rightmove at 2 bedroom houses for sale, there are 360 listed. I then hit list by cheapest first and look at the 180th property (so the property right in the middle, half are cheaper half are more expensive). That happens to be a property for £130,000 asking price with plenty on at £130,000 here is an example
http://www.rightmove.co.uk/property-for-sale/property-65557238.html
Ok so now we have the median price lets do the same for the median rental for a 2 bed house in birmingham.
Rightmove shows 180 such properties, so again list by cheapest and look at the 90th property which shows up as £650 per month eg
http://www.rightmove.co.uk/property-to-rent/property-58454767.html
So we have the median Birmingham 2 bedroom house costing £130,000 or £650 per month to rent or exactly 6% yield.
So if the option is to buy today, or wait 5 years and buy in 5 years time what does the math say?
The owner buys using a 75% mortgage from Barclays for 1.99% fixed for 5 years and they lose interest on their 25% at 2% in a good savings account
The cost is thus £13,000 in interest paid/lost for the buyer plus £1000 mortgage fee = £14,000. If we assume £1000 per year in maintinance costs for a house that adds £5000 so the total cost is ~£19,000The cost for the renter is at least £39,000 assuming no rent increase over 5 years and no tenant fees on the way in.
So it is £19,000 to buy or £39,000 to rent
If house prices stay the same over the next 5 years the buyer is £20,000 better off
In this example, if house prices fall 15% its still better to have bought today. If house prices stay the same its much better to have bought today and if house prices are 15% higher in five years then choosing to rent would have been a £40,000 mistake.
Low interest rates provide some degree of house price crash insurance
You might aswell shout at the moon.
I've been through this reasoning and kicked myself many times for not going through it when I was much younger. Basically, from right now - you need a short, sharp crash to stand any chance of coming out ahead. If you started saving 5 years ago in the hope of some rationalisation, you need it to be even shorter and sharper. 10 years and your chances of coming out ahead are pretty much zero.
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13 minutes ago, long time lurking said:
Who said risk free ...and it`s far more liquid than a £80k debt on a pile of bricks and far less work
Just seen this - if you're using it to calculate opportunity cost you should be using a risk free rate. The alternative is to use some kind of NPV calculation to discount future cashflow.
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There's more to this - This is comparing right at the peak of a bubble (which I believe we're at, all we're arguing about now is the speed of the crash) and therefore the possibility of capital appreciation in the OP scenario is set to zero.
Compare this scenario with buying just 3 or 4 years ago, compare it with buying in 2007. It's an awfully unpalatable fact that most OO (absolutely not talking about BTL) are home and hosed. And to labour a point I've made before: because government intervention is so unpredictable, sitting out the market and continuing to stick cash in the bank hoping to one day swoop in a pick up a property for a song is just as risky as buying now.
One more point: Where can you get a 3% risk free return on savings these days? Serious question, if I'm missing something I'd like to know.
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I have mates who rave about lease deals, but whenever I go through the numbers I can't make it stack - particularly in the face of the risk of doing something that causes the car to depreciate at faster than book, leaving me on the hook for money I don't want to pay.
There's value in being able to use a fully depreciated asset, which people who only ever lease will never have. In fact, just looked again. Hippo leasing will kindly lease me a 3 year old insignia with 30-40k on the clock for £182/month over 4 years. The finance to buy it over 4 years is cheaper than that.
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3 hours ago, durhamborn said:
I sell on AMZ and my margins are around 50%.They sourced the same products,but dropped them and asked me to supply through prime for them.I refused and kept things as they are because i want to keep under the VAT threshold.No interest in growing.AMZ makes money because of third party sellers.If they ever lost all of those they would struggle because they have a high cost base compared to independant sellers.What kills B and M stores are the rates to pay for the council pensions.
This just shows that most people don't even know what Amazon is. Amazon's profit doesn't primarily come from retail.
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18 hours ago, spyguy said:
The problem with AMZ is that it has poor margins.
Apples margins are ~60%.
Amazons are 1.5%
At the mo, Amazon is being given a huge pass. Maybe itll work, maybe it wont.
That's competitive retail in a capitalist society. It's a volume and operational efficiency game. Hence Amazon's huge investment in operational technology. They literally can't survive without it.
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18 hours ago, spyguy said:
I dont think AMZ have lots of debt.
Thry are using equity and cashflow.
So the problem with Amazon is what exactly? What leads anyone to the conclusion that they're going to blow up when all the signs actually point in the other direction?
Should add - on the debt issue they do have more than their compeitors. But guess what, the general consensus is that it's fairly well managed!
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On 14/04/2017 at 10:17 AM, spyguy said:
No.
There's litle management of their finances. They are jyst operaitng on low to zilch margins.
As far as green cards, neither Amazon or MS register much on that. Sure, MS will get a load but they pay the sam, whether you are Merkin or foreign. Most of MS +AMZ non Merkin workers appear to come from around the world.
The abuse of the green cards/H1b is purely in the outsourcers who operate a form a bonded Labour. Its ending as the H1b has been rumbled and compnaies are avoiding subcontinent outsourcers.
No one said they were using cheap foreigners, just a lot of them.
Thin the margins may be - that's no surprise in retail, but that doesn't make them a fundamentally bad business.
And yes, they have a lot of debt - also to be expected in a phase where they're aggressively expansionist.
But no management of finance? Look at the graph, it tells an entirely different story.
How do people pay the upfront deposit on PCP car finance deals, and how do they afford it?
in House prices and the economy
Posted
One thing's for sure - these cars aren't finding their way to the 2nd hand market. The model is a dream for manufacturers, they extract all the value from high value economies then ship the cars or parts out to places where they can extract the maximum value from lower value economies. This is really just a reflection of the fact that business models have become extremely sophisticated in all markets.